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Leonard (Phoenix) is walking along a bridge over a creek in Brooklyn, when suddenly he jumps into the water in an attempted suicide. He changes his mind and quickly walks home to his parents' apartment. His mother, seeing him dripping wet, tells her husband their son has tried it again and it becomes evident that Leonard has tried to kill himself before.

His parents tell him that a potential business partner and his family are invited for dinner that night and ask him to be present. When they arrive, Leonard finds that he had been set up with the other family's daughter, Sandra (Shaw). She inquires about his interest in photography and notices a photo of a girl above his headboard. He explains he had been engaged to the girl for several years, but the relationship was broken off when it turned out both he and his fiancée carried the gene for Tay–Sachs disease, which results in diseased children who generally don't live beyond age 12, so they would be unable to have healthy children.

Leonard meets a new neighbor, Michelle (Paltrow), and is immediately attracted to her, choosing to ignore that she has a drug usage problem. He learns that she is dating a married partner in her law firm, Ronald (Koteas). At her request, Leonard agrees to meet Ronald and Michelle for dinner at a restaurant. The couple leave him later that evening, as they have plans to attend the Metropolitan Opera. Leonard returns home upset, but to his surprise, Sandra arrives, sent over by Leonard's parents. She is under the impression that Leonard wanted her to come by, but realizes by his surprised look that she was set up. She apologizes for the misunderstanding and says that, if he isn't interested, a lot of other guys are. Leonard says that he likes her, and they kiss and eventually make love, and with time, his relationship with Sandra deepens.

Michelle calls Leonard and says she is sick. He takes her to the hospital, where she has a D&C for a miscarriage. She had not known she was pregnant and is even more upset that Ronald didn't respond to her calls. Leonard takes her home but Ronald arrives. Leonard hides while Ronald apologizes to Michelle for not having come to her aid. Michelle coldly asks Ronald to leave. She then asks Leonard to write something on her forearm with his finger while she falls asleep. Leonard writes "I love you".

Two weeks later, Michelle meets Leonard on the roof of their building and tells him that she has broken up with Ronald and is going to San Francisco. Leonard tells her not to leave and professes his love for her. They have sex and plan to leave together the next day for San Francisco.

On New Year's Eve, Leonard buys an engagement ring for Michelle. He is then summoned by Sandra's father and is offered a partnership in the family businesses, with the assumption that he is going to marry Sandra. Noticing the jeweler's gift bag Leonard is holding, the father assumes it is for Sandra; Leonard lies that it is.

During his parents' New Year's Eve party, Leonard ducks out to the courtyard to meet Michelle. Michelle arrives ten minutes past departure time and tells Leonard that she isn't going to San Francisco, because Ronald, having learned Michelle is leaving him for California, decided to leave his wife and children for her. Distraught, Leonard breaks things off with her for good.

Feeling desolate, Leonard heads to the beach, presumably intending to kill himself. When he drops a glove that Sandra had bought for him, he realizes that, in Sandra, he has found someone who loves him and with whom he can build a decent life. He picks up the glove and sees the boxed engagement ring lying on the sand, where he had thrown it from the boardwalk earlier. He returns to the party, where he gives Sandra the ring and embraces her in a prolonged hug.

The film has received largely positive reviews from critics. Rotten Tomatoes reported that 82% of critics gave positive reviews based on 82 reviews.[3] On another review aggregator, Metacritic, which assigns a rating out of 100 to reviews from mainstream critics, the film received a 75% approval rating based on 28 reviews.[4] Ray Bennett from The Hollywood Reporter defined the film as "an old-fashioned love story in which the melodramatic trapdoors of shock and surprise never open" and added that the film "will please many and it may win awards", though "the acting is (...) restrained." He also lauded the film as "a throwback to the days when love in the movies involved the mind as well as the heart."[5]